The co-founder of a shuttered Missouri-based healthcare-sharing ministry was sentenced to 12 years in prison for his role in a fraud scheme that the Justice Department said cheated hundreds of members.
James McGinnis, 78, of St. Joseph, Mo., was the co-founder of Medical Cost Sharing. He, fellow co-founder Craig Reynolds, and other co-conspirators used false promises to market Medical Cost Sharing as a healthcare-sharing ministry to defraud hundreds of members, according to a Nov. 22 Justice Department news release.
The Justice Department said they collected more than $8 million in member contributions but paid only 3.1% in healthcare claims so they could "personally profit and take most of the members’ contributions for themselves."
Mr. McGinnis and Mr. Reynolds pocketed more than $5.1 million from member contributions between December 2015 and December 2022. Healthcare-sharing ministries are a form of health coverage where members, who usually share a religious belief, make monthly payments to cover the expenses of other members. They are not health insurance plans.
Mr. McGinnis pleaded guilty in April to one count of conspiracy to commit wire fraud and one count of making false statements on a tax return. In addition to the prison sentence, Mr. McGinnis was also ordered to pay $7.8 million in restitution to the victims, $143,000 to the Internal Revenue Service, and nearly $11,000 to the Missouri Department of Revenue.
Mr. Reynolds was sentenced in June in a separate but related case to 17 years and six months in prison.
Federal authorities shut down Medical Cost Sharing in February 2023.